Boeing plans to eliminate contractors to streamline supply chain

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Due to crossover within the supply chain and legacy systems creating information silos within departments, Boeing is reorganizing its supply chain, The Seattle Times reported last week.

A reduction of managers and repetitious layers with the chain is the ultimate goal. Boeing hopes to accomplish this through attrition and a reduction in contract workers.

The aerospace giant also intends to closely examine its relationships with suppliers in order to redirect work to those which are best functioning, or even bring work in-house. An increase in digital analytics and information technology is also on Boeing's agenda, results from which should begin appearing by year's end.

Before Boeing can address the issue of supplier mergers, it must synchronize its own supply chain, which is admittedly tough to do within a company receiving roughly 1 billion parts annually. Yet the vastness of its procurement needs requires it to pare down as much as possible, not only to reduce spending but also to streamline itself through the maximized use of information technology and digital analytics which effectively track supplies and identify blockages. If Boeing can succeed at this effort, it will certainly minimize costs and create a better, more communicative chain, lacking disparity and excess.

Boeing's resolve to streamline its supply chain is in line with the company's recent disapproval of the Rockwell-United Technologies merger, which Boeing said would limit competition among suppliers in its supply chain. Of course, Boeing said that because the company recently set up an in-house supplier (Boeing Avionics) to increase profit margins, which a Rockwell-United Technologies merger would pinch.

This suggests Boeing is trying to become a self-sustaining manufacturer and limit its reliance on anyone outside the company — including contractors and suppliers. That may be difficult for a big, sprawling company like Boeing, but the aerospace manufacturer also understands that agility and adaptability are key in the current economic climate that centers around e-commerce and swift logistics.